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Friday, 29 December 2006

Buying a business in Thailand

I am still amazed at the number of people who think that running a business in Thailand is going to be easy – in particular in the entertainment and hospitality industry. We get enquiries from people looking for a beer bar at the one end of the scale to a full scale resort at the other. The former we do not deal with nevertheless we still get young men in particular who walk through our door looking for a bar to buy with their latest girlfriend. She will run it and he will sit back and take the profits, drink and have a good time with his mates. I send them on their way with the names of a couple of bar owners I know who may be able to advise them of the pitfalls they will encounter. A few heed the warnings, but many do not and end up losing a significant amount of their savings. Those that get through the first couple of years discover that sitting at a bar seven days a week with no time off is not the same as sitting at the bar for your two week annual holiday. And if you are not there all the time you will get ripped off big time.

Moving up market to Pubs and Restaurants, there are many people who want a change of lifestyle, about to retire but want something to do. A Pub or Restaurant seems a good idea. Without experience they are going to have a problem and many have no idea of how the economics of these businesses work or how they can assess the potential revenue they can achieve and consequently the price they should pay. Few businesses will open their books to you and you have to be wary of how accurate the figures produced actually are. I treat revenue figures with a great deal of caution. I am much more interested in the running costs and in particular the cost of supplies. If the owner buys ten cases of beer a week on a regular basis then it is likely that he sells ten cases on a regular basis.

The next major hurdle we face is the changes that will be made to the Foreign Business Act which should be announced soon. The old multi class shareholdings may be on the way out and control will based on voting rights, not shareholdings. As a foreigner you can only own 49% of the shares in your business and so can be out voted by the majority Thai shareholders. This surely will have a negative effect on anyone considering investing in a business here for the first time. It will be interesting to see what new angles the Thai Lawyers come up with to deal with this one.


Edgar Lemos Pereira said...

I there,
Me and my boyfriend, we're considering getting out of our country and we've been thinking exactly at Thailand.
My idea was to open a beach bar at ko samui. Do you know where can I get some information about it?
Tks in advance

Edgar Lemos Pereira said...

sorry, can you forward me that info at

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